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The IMB aware of the escalating level of this criminal activity, wanted to provide a free service to the seafarer and established the 24 hour IMB Piracy Reporting Centre (PRC) in Kuala Lumpur, Malaysia.
A newsletter about fraud and global asset recovery from the office of International Chamber of Commerce's FraudNet. To read about key asset recovery cases and global compliance with anti-fraud and money-laundering laws, please click in the link above for the Newsletter PDF.
CCS offers a flexible membership arrangement based on the selection of predetermined membership packages. A prospective member can elect to join one or more Bureaux according to their requirements.
Losses due to official misconduct account for a great many maritime trade incidents. Each incident can be complex and wide-ranging in nature. It is therefore unlikely that any one company will have the knowledge and resources to be able to investigate it thoroughly.
Counterfeiting and piracy are a drain on our businesses and on the global economy. It has resulted in the widespread loss of lawful employment and a massive reduction of tax revenues.
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tomislav.sunjka@sunjkalawoffice.com www.sunjkalawoffice.com |
Address
Sremska 4/I
1st Floor 21000 Novi Sad, Serbia |
Telephone
+38163542528, +381214721788
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Languages
English, Russian
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Conversations About Global Collaboration Fall Short in Asset Recovery The world has been abuzz with opinions and theories about whether we may be entering a paradigm shift when it comes to global collaboration for asset recovery. This after British Prime Minister David Cameron announced a few weeks ago, while meeting with other world leaders at the Anti-Corruption Summit in London, plans for a first-ever Global Forum for Asset Recovery.
Step in the Right Direction? At first blush, this step to gather all involved in asset recovery – governments, law enforcement agencies, financial institutions and regulators – to share and analyse information about illicit financial transactions, seems to be one in the right direction. But, we’ve witnessed first-hand the limitations that governments and government authorities have when it comes to successful asset recovery. |
Governments’ Limited Reach The government, courts, prosecutors and different security structures have a range of mechanisms and instruments in their respective jurisdictions to temporarily freeze and/or permanently take away property or funds acquired through criminal activity. However, the speed and efficiency of these mechanisms and means is territorially limited. Sure, they are usually effective in their jurisdictions, but even national jurisdictions lack competence and expertise, when dealing with complex transactions, accounts, company structures and the persons whose assets are tracked. When performing temporary and permanent freezing of property or assets, the government mainly performs the imperative functions –freezing and appropriating the assets – and then shifts the burden of proof to the person or company, forcing them to prove that the particular asset was acquired legally. In cases with cross border elements, efficiency and especially speed of law enforcements agencies and prosecutors, as a principle, is largely absent. Furthermore, governments are not usually willing or prepared to connect and cooperate with private professionals who know exactly what they should do. Often, these governments have the opinion that the professionals have lucrative intentions, i.e. enrichment at the expense of victims. They may also fear information leaking from investigative and criminal proceedings, so they are not willing to use such information and evidence or share them with professionals. Even if they do, they do it only partially and very selectively. Turning to Private-Sector Professionals However, there are examples, which are most often associated with changes in regimes or through international organizations and interventions, when private-sector professionals are engaged to pursue asset recovery. New governments usually do not trust the asset-tracing practices and safety systems of previous governments, because they are afraid that instead of asset recovery, the assets or traces of them would be hidden. They may also fear that when international organizations are involved, the assets will again be hidden and corruption will take place. The above examples point to criminal asset recovery only. When it comes to civil asset recovery, governments generally just do not deal with it, letting victims to care for their interests themselves. So, while talk of this global collaboration seems encouraging, we’re not yet convinced anything will change unless governments are constantly educated and informed about how the help of professionals, who know what to do, is necessary and should be a primary goal. Tomislav Šunjka, the founding partner of the Law office of Tomislav Sunjka in Serbia, focuses his practice on numerous areas of law within the corporate and government sectors. He is experienced, especially in international asset tracking and recovery and represents victims of white-collar crime. He is a member of the Vojvodina and Serbia Bar and the International Bar Association. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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Economic Crime Survey Reveals Money Laundering Risks In our world of asset tracing and asset recovery, we regularly witness the ill effects that money laundering and other economic crimes have on companies, organizations and even governments. Financial institutions, too, know all too well the impact economic crimes have on their clients and, often, themselves, especially with the increasing regulation and compliance standards they must follow. Yet, despite our collective experience, many global organizations still lag behind in preventing and reporting economic crimes and bringing their perpetrators to justice.
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Pricewaterhouse Coopers (PwC) recently released its Global Economic Crime Survey 2016, and it reveals that more than a third of the 6,337 organizations in 115 countries that responded to the survey have experienced economic crime over the past 24 months. While overall the incidence has come down by 1 percent since the global financial crisis in 2008-2009, PwC warns this small decrease may be hiding that economic crime is changing and organizations are struggling to keep pace with its evolution. Further, PwC reports the financial cost of each fraud is on the rise. One of the primary areas organizations should focus their risk-mitigation strategies on, according to the findings of the report, is anti-money laundering controls and programs. And, as the survey indicates, banks and financial institutions are not the only ones that should follow these strategies. In fact, newer Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations include any organization, such as digital or mobile payment services, life insurers and even law firms, that facilitates transactions. Many of these sectors – previously untouched by these types of regulations – are unsure how to adequately implement controls or even conduct risk assessments. This exposes many more global companies to the threat of money laundering and the resulting reputational risks. These exposures threaten an organization’s bottom line, which is also being impacted by increased costs to roll out compliance programs and to protect the organization’s finances against potential fines and other sanctions. Estimates place the global cost increases at 9 percent annually, surpassing US $8 billion by 2017. To try to keep pace with this quickly changing environment of threats and regulations, companies are turning toward hiring employees experienced in this arena. But, as the survey found, supply of employees well versed in the global regulatory environment, transaction monitoring and data analytics, falls far behind growing demand. Couple that with outdated monitoring technology, and companies face an increasing uphill battle against potential criminal activity. Maintaining a sound internal infrastructure against criminal activity is paramount to combating economic crimes, but getting back to basics and knowing their customers is equally important for companies to prevent criminal activity like money laundering. An adequate and continuous “Know Your Customer” policy, the survey notes, is essential for identifying suspicious activities. For example, business relationships and frequent transactions in countries with weak AML regulations may be a red flag to prompt action. Like the regulations that guard against them, economic crimes are evolving to outpace those regulations. While these tools somewhat level the playing field, the criminals are staying one step ahead. Keeping our eyes on the horizon for what’s to come next and paying close attention to what threatens our clients now, will help us better advise them if, but more likely when, these economic crimes occur. Rodrigo Callejas, partner with Carrillo y Asociados, focuses on insolvency, fraud, asset tracing and asset recovery. He has actively participated in complex white-collar crime investigations in Central and South America, United States, the Caribbean and Europe. The author gratefully acknowledges the assistance of James Pomeroy of PwC in preparing this article. ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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snp@pcblitigation.com www.pcblitigation.com |
Address
4th Floor
90 Chancery Lane London WC2A 1EU DX: 0038 LDE United Kingdom |
Telephone
+44 (0) 20 7831 2691
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Languages
English
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Russia’s Increased Asset Recovery Effort It is apparent that an increasingly forceful approach is being taken by Russia to tackle fraud.
Corruption and Fraud A recent survey conducted by the Economic Intelligence Unit for the 2015-2016 Global Fraud Report indicated that 20 percent of Russian senior executives, who responded to the survey, reported theft of physical assets or stock. Twenty percent of those Russian respondents also reported corruption and bribery, while 17 percent reported misappropriation of company funds and 13 percent cited vendor, supplier or procurement fraud. By comparison, in the 2013-14 Global Fraud Report, 32 percent of Russians reported corruption and bribery, 29 percent noted information theft, loss or attack, and 24 percent reported management conflicts of interest. From this, it seems there is not a clear driver for the bulk of fraud in Russia. |
Regulation and Legislation Nevertheless, Russia has taken a more forceful approach to curbing fraud. For example, the country joined the OECD Anti-Bribery Convention in 2012, and in 2013, Russia’s Federal Anti-Corruption Law No. 273 introduced requirements for companies to set up compliance programmes containing anti-corruption measures. Companies that fail to comply with these requirements could incur heavy fines. This law is similar to internationally-recognised anti-fraud and corruption legislation in the United Kingdom and in the United States. Furthermore, in 2014 and 2015, steps were taken so that Russians would begin reporting annually on foreign bank account transactions and declaring any ownership of more than 10 percent in any controlled foreign company. Litigation in English Courts As the Russian government looks for solutions to further reduce corruption and fraud, we are seeing an upward trend in government agencies and state-owned entities pursuing fraudsters. These cases are showing up more and more in English courts with an increasing number of Russian litigants. In fact, from March 2014 to March 2015, only U.S. - based parties litigated more than Russians in the English Commercial Court. It is no surprise that so many foreign litigants take advantage of our courts. It is because in England, we have at our disposal a wide array of tools that can be used to seek and recover assets worldwide. Of course, success depends upon where the assets are located and how well they have been hidden. However, we regularly coordinate internationally, in places like Russia, and implement cross-border strategies designed to recover assets. Recovery of Russian Assets There have been various recent examples of attempts to recover stolen money. One method used is obtaining ancillary relief for defendants who may be facing up to two years of imprisonment if they do not disclose their assets. This relief can be a powerful tool and one we use regularly, and it often compels these defendants to settle with their victims. Such settlements are often confidential, so we cannot be certain of the extent to which the recovery of such assets has been successful. Yet, we look to the increase in cases as an indication that something positive is coming out of these matters. Curbing a Vicious Cycle While the Russian government tries to further reduce corruption and fraud through regulatory, legislative and judicial maneuvering, we may not be seeing an actual increase in fraud, but rather an increase in exposure as high staff turnover, riskier markets and complex information technology platforms continue to challenge companies. These types of issues are not necessarily within the government’s control. Steven Philippsohn is a leading authority on complex international asset recovery. Over the last 30 years his firm has been retained by governmental, national and international organisations. A founding member of ICC FraudNet, he is listed by The Times of London as one of the 100 key influential legal professionals in the United Kingdom. Among his firm's highlighted work is representation of the primary defendant to a $1 billion claim (one of The Lawyer’s Top 20 cases for 2014 and 2015). ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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edavis@astidavis.com www.astidavis.com |
Address
1001 Brickell Bay Drive
79th Floor, Miami Florida 33131 |
Telephone
+1 (305) 372-8282
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Languages
English, Spanish, Portuguese, Italian
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The Hypocrisy of Transparency in the U.S. Timing is everything! With last month’s release of the existence of and exploitation of the so-called “Panama Papers” captivating the world and revealing how easy it is to form and own a corporation anonymously, we had the timeliest topic to discuss at the Offshore Alert Conference on Miami Beach.
So my fellow panelists and I decided to tackle, in our conference presentation, how the United States criticizes other governments for allowing opaqueness in corporate ownership, but allows its states to hide ultimate beneficial owners as well. Essentially, the U.S. has become a finger-pointing ideologue that must put an end to calling the kettle black and get its own house in order. |
States’ Authority in a Federal Government The U.S. form of government – a federal republic – means that its 50 state sovereign governments are solely responsible for the vast majority of law making and governmental regulation relating to corporate formation and transparency (or the lack thereof). The federal government generally only steps in when an issue affects several states and, of course,on U.S. taxation issues. Essentially, that means the U.S. has 50 sovereign governments that make their own decisions and laws. And with respect to corporation registries, that means that each state makes its own rules. States’ Financial Boost It’s no surprise, then, that states with shrinking coffers and limited resources see a source of income from individuals or corporations wanting to establish shell companies or subsidiaries within their boundaries. These states benefit directly and financially from fees paid to establish and maintain these corporations, but they also benefit indirectly, since their banks and lawyers are also getting a share of the income for managing these corporations and assets. It should also be no surprise that those additional revenue streams make it politically challenging to promote sweeping changes. So states like Delaware, Wyoming, Nevada and Montana (and many others, too) allow corporations to be set up with little or no ownership information required. In Delaware, you can even set up a corporation for your cat in about five minutes! While these states often are the ones cited, the truth is few states require the identity of the ultimate beneficial owner to set up a corporation. Even when a corporation is transferred to another “owner,” little-to-no information is required of the new owner. That’s mainly because states lack the resources to follow up on these corporations once they’ve been established. It is why we, as asset-tracing specialists, and law enforcement investigators face numerous challenges tracking down assets and their owners owned by U.S. corporations. Real Estate Laundering While states that set up the corporations benefit financially, there’s a trickle-down effect to other states, too. States with booming real estate markets, like Florida, New York and California, for example, reap the benefits when these same shell corporations are used to purchase real estate and launder the money they’ve received through illegal activities. It’s why many luxurious condos in Manhattan and Miami are not owned by John Smith, but rather by the XYZ Corporation. The New York Times, last year, exposed how this works in its five-part series Towers of Secrecy. While you can’t own a bank account in the United States without the bank knowing (or at least being required to know) the identity of the ultimate beneficial owner, you can own a luxury condo essentially anonymously if it’s owned by a corporate name in a layered structure. Steps to Transparency To be fair, changes have been introduced to set the U.S. on the right course. In February, Sen. Sheldon Whitehouse (D-R.I.) sponsored a bill, the Incorporation Transparency and Law Enforcement Assistance Act, in the U.S. Senate that calls for the disclosure of beneficial owners to prevent opacity and to assist law enforcement in detecting civil and criminal misconduct, including terrorism. The bill, co-sponsored by Sen. Dianne Feinstein (D-Calif.), aims to enforce states’ compliance by withdrawing some federal funding if they are found to be noncompliant. The bill is now being considered by the Senate Judiciary Committee. And to curb money laundering through real estate investments, the Financial Crimes Enforcement Network (FinCen) of the U.S. Department of the Treasury, in January, issued temporary Geographic Targeting Orders requiring certain U.S. title insurance companies to report all-cash purchases of real estate in Manhattan and Miami through August 27, 2016. Of course, real reform will take years to come to fruition. But with the exposure of these practices by the “Panama Papers,” and public ire turning toward shell corporations and opacity in corporate transactions, we may be standing at the threshold of change. And the more we, as asset-recovery lawyers, talk about it with our colleagues in the media and in law enforcement – as I did with my fellow panelists at OAC 2016 – and with lawmakers, the more likely we’ll begin to shrink this growing hypocrisy. Edward H. Davis, Jr. has practiced law for 28 years, and is a founding shareholder of the Miami international law firm, Astigarraga Davis. As a Certified Fraud Examiner, he heads the firm's Asset Recovery and Financial Fraud group, representing victims of fraud and grand corruption including governments, governmental entities, corporations, hedge funds, insolvency practitioners and individuals by investigating and prosecuting civil fraud and asset recovery actions. He serves as inaugural chair of the International Bar Association’s Anti-Corruption Committee’s Subcommittee on Asset Recovery, and is a leading original member of the London-based International Chamber of Commerce Commercial Crimes Services FraudNet Network. In 2013 Ed has been recognized as the Asset Recovery Lawyer of the Year by Who’s Who Legal since 2014. ICC FraudNet is an international network of independent lawyers, who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. |
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